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OECD Council at Ministerial Level, 15-16 May 2002

16/05/2002 - Final Communique

1.The OECD Council at Ministerial level met on 15-16 May 2002, under the chairmanship of Prime Minister Guy Verhofstadt of Belgium, assisted by the vice-chairs from Spain, Mr. Rodrigo de Rato y Figaredo, Vice-President of the Government and Minister of Economy, and from New Zealand, Mr. Jim Sutton, Minister for Trade Negotiations. The central theme of the meeting was Partnership for Growth and Development. Ministers welcomed the participation of their colleagues from key non-OECD economies in two sessions of the meeting, including a luncheon discussion with Ministers from the Steering Committee of the New Partnership for Africa's Development. OECD Ministers also welcomed the opportunity to consult with the Business and Industry Advisory Committee ( BIAC) and the Trade Union Advisory Committee ( TUAC) to the OECD. Belgian Minister of State for Foreign Affairs, Annemie Neyts-Uyttebroeck, reported on OECD Forum 2002, which was held in conjunction with the Ministerial meeting. The Forum provided an opportunity for leaders from civil society, business and labour to discuss important policy issues with government ministers and leaders of international organisations, and to contribute to the outcome of the Ministerial meeting.

2.In the 12 months since we last met, our governments have dealt successfully with difficult economic challenges and have made good progress on a forward-looking agenda on trade and development. A recovery has begun after what has proved to be a relatively brief and shallow downturn. The global economy has shown resilience in absorbing and largely overcoming the terrorist shocks of last September. Further structural reforms as well as appropriate monetary and fiscal policies are necessary to reinforce growth in our economies. While problems have been exposed in the area of corporate governance, they have served to reinforce the commitment of governments and the private sector to address these important issues thereby helping to maintain confidence in the international economy. The Doha Development Agenda, the Monterrey Consensus and the forthcoming Johannesburg Summit are building a new partnership between developing and developed countries to address one of the greatest challenges of the new century - how to improve substantially the quality of life in the poorer regions of the world and to ensure that development in all countries is sustainable. In all of these areas, the OECD has a major role to play in helping its members, as well as other economies, to devise and implement the policies needed to achieve their goals. In this regard, we welcome the growing interest among non-members in participating in OECD's work.

Economic Outlook and the Recovery

3.We are pleased to see that the recovery is underway. Economic growth picked up in the United States and some other countries at various points last year and is likely to gain momentum in Europe and most of the OECD area in the course of this year, with Japan expected to experience a modest recovery beginning later in the year. The determined easing of monetary policy across most countries and fiscal stimulus in some have contributed strongly to the return of growth. These policy actions were, in turn, facilitated by earlier progress in promoting low and stable inflation, medium and long term sustainability of public finances and structural reform aimed at boosting growth and employment. Despite this promising outlook, risks and uncertainties remain. We have an ongoing responsibility to implement sound macro-economic policies and structural reforms to sustain recovery and support strengthened productivity growth in our economies.

4.In this regard:

-- Monetary policies should remain supportive of non-inflationary growth. Consideration should be given to scaling back stimulus, at some point, in countries where the recovery is established and where there is a danger of jeopardising hard-won gains on inflation. Where price deflation persists, monetary policy needs to continue to provide ample liquidity.

-- We will take advantage of the recovery to strengthen fiscal positions.

-- We will continue to undertake structural reforms, thereby creating an environment in which economic efficiency, higher levels of employment, and improved living standards are more likely to be realised. We will emphasise:

Policies to enhance competition in product and service markets, the reduction of trade distorting and environmentally harmful subsidies, more comprehensive regulatory reform and more efficient public sectors.

Development of human resources, focussing on education and training, and policies that foster a more dynamic environment for job creation and equal opportunities.

Stronger efforts to meet the fiscal challenges of ageing societies through further reforms to tax, pension and benefit systems. At the same time, policies should be implemented that encourage older workers to remain employed, including through the lowering of barriers to their hiring and retention. Life-long learning is vital in this regard.

Policy reforms to seize the benefits of new technologies, including information and communication technologies (ICT) such as broadband, and thereby foster innovation, entrepreneurship, investment, and new business opportunities, including through e-commerce. We look to ICT to help increase access to and responsiveness of governments.

5.We look to the OECD to draw on the policy lessons from countries' experiences with economic reform, including through comparative analysis, to help us in all these areas, and to monitor progress. In particular, we ask the OECD to increase its monitoring of member countries' implementation of the recommendations in the OECD Growth Study and to assess the Jobs Strategy. The OECD should also continue to analyse the economic and social impact of migration in both host and origin countries. We invite the Secretary-General to bring forward a proposal for a meeting of Labour Ministers in 2003 to discuss some of these important issues.

6.In our fight against terrorism, we will implement necessary security policies in ways that avoid undermining our open, competitive markets and safeguard human rights and democratic values. The OECD will continue to monitor the economic effects and the economic policy response to terrorism, including the implications for market openness and increased costs of trade.

7.We recognise the adverse effects of the shrinkage of affordable insurance cover for terrorism risks. We would welcome OECD policy analysis and recommendations on how to define and cover terrorism risks and to assess the respective roles of the insurance industry, financial markets and governments, including for the coverage of "mega-terrorism" risks.

8.We look forward to the completion of the revision of the 1992 OECD Guidelines for the Security of Information Systems before 11 September 2002. We encourage the OECD to promote the implementation of the revised Guidelines among governments, the private sector and civil society. We also encourage the OECD to continue its work aimed at strengthening consumer trust in e-commerce.

Ensuring Integrity and Transparency in the International Economy

9.The integrity of corporations, financial institutions and markets is central to the health of our economies and their stability. Governments and supervisory bodies need to be vigilant to ensure that financial standards, regulations and methods of market surveillance are effective in maintaining investor confidence and protecting the interests of stakeholders.

10.The scope for financial crime and abuse, which can threaten strategic, political and economic interests of sovereign states, has increased with the expansion and integration of financial markets and the use of new technologies. Money laundering, bribery, illicit tax practices, the misuse of corporate entities and security fraud are often inter-linked and challenge the integrity of the global economy. The threat posed by the financing of terrorism adds urgency to the need for coherent and complementary responses at both national and international levels.

11.We agree:

That implementation of best practices in corporate and financial governance entails an appropriate mix of incentives, balanced between government regulation and self-regulation. We seek to improve such governance to enhance transparency and accountability and thereby strengthen investor confidence and the stability and resilience of financial markets. Effective enforcement of rules on corporate governance is essential.

That the OECD will survey developments in OECD countries on governance in the corporate and financial sectors, with a view to identifying lessons to be learned and the implications for the assessment of the OECD Principles of Corporate Governance. In this connection, we agree that this assessment should be brought forward from 2005 to 2004.

That OECD will continue its successful co-operative programme with the World Bank to promote corporate governance reform efforts worldwide, using the OECD Principles of Corporate Governance as a benchmark.

To encourage the OECD and the Financial Action Task Force ( FATF) to strengthen their co-operation on issues of mutual concern, including ongoing work on combating tax crimes in accordance with the 1999 Ministerial communiqué. We commend the FATF's work to combat money laundering and the financing of terrorism. We urge all countries to implement quickly the FATF Special Recommendations on Terrorist Financing.

To urge Parties to the OECD Anti-Bribery Convention to enforce rigorously the Convention and call on those that have not yet done so to adopt implementing legislation as soon as possible; others should remedy identified deficiencies in their implementing legislation without delay. We urge all Parties to enforce these laws diligently. We reiterate the principle of openness of the Convention to non-signatories in accordance with the terms of the Convention and its Commentaries, the requirement of rigorous monitoring and the mandate to pursue work to strengthen the Convention. We call on all Parties to ensure that adequate means are made available for both an expedited peer monitoring process and the implementation of national commitments. Parties to the Convention should assess whether there are gaps in the Convention and related anti-bribery instruments and identify possible solutions; we look forward to a report to Ministers in 2003.

To continue to promote implementation of the OECD Guidelines for Multinational Enterprises, which provide recommendations for responsible corporate behaviour, including in such areas as transparency and anti-corruption.

12.Ministers having approved the 1998 and subsequent reports on harmful tax practices welcome the commitments made by 31 jurisdictions to transparency and effective exchange of information for tax purposes, and encourage those jurisdictions on the List of Uncooperative Tax Havens to make similar commitments. Ministers encourage all the relevant international institutions to work together to help jurisdictions to implement their commitments in these areas. More generally, we look forward to further progress in the timely implementation of the measures foreseen in the 2000 OECD consensus Report on Improving Access to Bank Information for Tax Purposes, thus improving effective exchange of information between tax authorities.

The Doha Development Agenda

13.We welcome the launch of the Doha Development Agenda and reaffirm our pledge to reject the use of protectionism. All OECD members have the responsibility to ensure that the multilateral trading system functions effectively; the implementation of the Doha agenda should not be hindered. We commit to building on the momentum from Doha and to making significant progress on all elements agreed in Doha in order to create the necessary conditions for a successful Fifth WTO Ministerial meeting to be held in Cancun, Mexico on 10-14 September 2003. We intend to conduct negotiations according to the agreed schedules, and conclude them by 1 January 2005. We will work together on the progressive liberalisation of market access, on the strengthening of WTO rules and disciplines and on facilitating the negotiating process on investment, competition, trade facilitation and transparency in government procurement. We will also work together on addressing WTO-related technical assistance and capacity building needs and implementation concerns.

14.Trade and investment liberalisation, underpinned by strengthened multilateral rules and combined with well-designed policies, contributes directly to improved welfare, sustainable development and poverty reduction in developed and developing countries. Such liberalisation can be conducted so as to minimise the social costs for adjustment, support environmental protection and preserve the right of governments to regulate in the public interest. We will continue to consult with non-members, business, labour and civil society. We welcome the creation of the ILO World Commission on the Social Dimension of Globalisation and will seek to contribute constructively to its activities. As stated in Monterrey, we will work towards the objective of duty-free and quota-free access for all least developed countries' exports.

15.In the process of negotiations, we call on all WTO members to address the concerns of developing countries, including market access, recognising that they have a particular interest in a number of areas, including agriculture, textiles and clothing. We will contribute actively to achieve the work programme set out in the Doha Declaration on the TRIPS Agreement and Public Health. Further benefits would accrue to developing countries if the substantial barriers they maintain are liberalised and multilateral rules and disciplines are strengthened. We call upon the OECD to work with the WTO to build its country file database as soon as possible, and we pledge to work with developing and low income countries in transition in addressing their WTO-related technical assistance and capacity building needs in order to advance the Doha agenda. The above will be most beneficial if combined with sound policies and good governance in developing countries.

16.We reaffirm our commitment to abide by multilateral rules. We will work together to address tensions in the steel sector, which have caused concerns in the multilateral trading system. We agree that structural adjustment policies in this sector must be pursued vigorously. In this regard, we take note of the report from the Secretary-General on the work undertaken in the inter-governmental high level meetings on steel under the auspices of the OECD. Aimed at addressing immediate and longer-term issues, this dialogue has focussed on issues related to the elimination of inefficient excess capacity worldwide, and strengthening disciplines on market-distorting measures and industry practices. We expect further progress by the end of 2002.

17.We support recent efforts in the OECD towards broad-based international negotiations on a new Shipbuilding Agreement in order to bring about normal competitive conditions in the world shipbuilding industry.

18.We expect the OECD to continue and reinforce its crucial policy analysis and activities in all the above areas, including its ongoing work addressing levels of support and their impact on production and trade. By sharing its work with civil society and non-member economies, the OECD can help to broaden the constituency for trade liberalisation and strengthened WTO rules, build bridges and facilitate multilateral trade negotiations.

From Monterrey to Johannesburg and Beyond: the OECD's Role

19.We recognise poverty reduction and sustainable development as an urgent priority for the international community. We will build on the consensus achieved at the Monterrey International Conference on Financing for Development in support of a comprehensive, partnership-based, results-focussed approach to achieving the internationally agreed goals of the Millennium Declaration. We welcome regional initiatives such as the New Partnership for Africa's Development ( NEPAD), the principles of which provide a positive example of this approach, and we appreciated the opportunity to meet today with Ministers from the NEPAD Steering Committee. We look forward to further dialogue between the NEPAD and the OECD to determine how we can best co-operate to advance the NEPAD initiative. We recognise and encourage the vital contribution of the private sector to development, and will address the need for technical assistance and capacity building to improve the investment climate in developing and transition economies. The Belgian Prime Minister presented the "PAIR" proposal to create a global fund for debt reduction for the least developed countries. There are other proposals currently under discussion on how we achieve sustainable debt relief under the HIPC initiative because of the fall in commodity prices.

20.The OECD has an important role to play in taking the Monterrey Consensus forward, as outlined in the "OECD Action for a Shared Development Agenda" annexed to this communiqué. This role entails encouraging policy coherence for development; supporting developing countries' governance and policy capacities; improving aid effectiveness and ensuring adequate aid volume; and strengthening partnerships and accountability.

21.We recognise the important opportunity presented by the forthcoming World Summit on Sustainable Development ( WSSD), and encourage all countries to play an active role to ensure its success. The OECD Report to WSSD illustrates the OECD countries' responsibility and capacity to contribute to sustainable development and to poverty reduction by enhancing economic growth, promoting human and social development and protecting the environment. We will continue to integrate these objectives into our national and international policies, including through intensifying the implementation of Agenda 21 as agreed in Rio in 1992. In the run-up to Johannesburg, we strongly reaffirm our commitment to the policy recommendations made in our 2001 Communiqué and our endorsement of the OECD Environmental Strategy for the First Decade of the 21st Century (1). We will also strengthen co-operation and partnerships with non-OECD countries to promote good governance and effective policies in all countries that are conducive to sustainable growth and development. We recognise the importance of the active involvement of the private sector, particularly through investment, and of civil society.

22.We ask the OECD to continue to work to fulfil its 2001 Ministerial Mandate, including the monitoring of progress across all three dimensions of sustainable development: enhancing economic growth, promoting human and social development and protecting the environment. We encourage the OECD and, where appropriate, the Round Table on Sustainable Development, to continue to generate policy ideas and build consensus for actions to help us achieve our sustainable development objectives.

23.We strongly endorse the current initiative on organisational reform. The OECD has a wide range of expertise. It plays a key role in providing interdisciplinary policy analysis and dialogue, based on a strong economic foundation, as well as in standard-setting and promoting best practices, in certain important areas, in member governments and, increasingly, through partnerships with non-members. We value this contribution. We welcome the OECD's effort to strengthen further its ability to adjust priorities to enable it to sharpen its focus on its core work and, at the same time, enhance its flexibility to take on new challenges. We look to the Secretary-General and the Council to take forward the reform initiative, and ask the Secretary-General to report on further progress to the 2003 Ministerial.

OECD ACTION FOR A SHARED DEVELOPMENT AGENDA

OECD's Role and Strengths

1.Contributing to global development is a key objective of the OECD. Its founding Convention calls upon the OECD to promote policies

"designed to contribute to sound economic expansion in Member as well as non-member countries in the process of economic development." (Article 1(b)).

Given increased interdependence, this objective is even more vital today in order to achieve poverty reduction and sustainable development globally. The principles and values that the OECD promotes -- commitments to democracy, market-based economies and open, rule-based, and non-discriminatory trading and financial systems, supported by good governance -- are essential to achieving our ultimate goal of the economic and social well being of all people, in a way that respects diversity and cultural identity.

2.OECD's strengths include a multidisciplinary capacity for analysis and policy dialogue, its sharing of best practices and monitoring of its Members through peer review, and extensive policy dialogue and capacity building activities with more than 70 non-member economies, international organisations and other stakeholders. The Development Assistance Committee ( DAC) provides a capacity to foster amongst donors concerted, well co-ordinated, effective and adequately financed international efforts in support of development and poverty reduction in developing countries.

3.The building blocks for achieving the internationally agreed goals of the Millennium Declaration are now in place, supported by a broadly shared view that effective development calls for a comprehensive, partnership-based and results-focused approach. Developing countries have primary responsibility for their economic and social development, establishing good governance and sound policies to mobilise domestic resources and attract private investment, while developed countries give increased attention to the impacts of their policies on developing countries, and assist developing countries, in particular least developed countries (LDCs), in their efforts to build the capacity necessary to make effective use of trade, investment and aid in support of poverty reduction and sustainable development.

How OECD Contributes

4.The OECD, for its part, will build upon its strengths to advance this shared development agenda in the following ways:

Encouraging policy coherence for development

5.Successful poverty reduction requires mutually supportive policies across a wide range of economic, social and environmental issues. Through its programme on policy coherence for development, the OECD will enhance understanding of the development dimensions of Member country policies and their impacts on developing countries. Analysis should consider trade-offs and potential synergies across such areas as trade, investment, agriculture, health, education, the environment and development co-operation, to encourage greater policy coherence in support of the internationally agreed development goals.

6.By increasing understanding of the development benefits of rules-based trade and investment, such work will help to reinforce our efforts, including promoting the better integration of developing countries into the multilateral trading system, to achieve more open markets both between developed and developing countries and among developing countries themselves to allow for export-led growth, and further our aim to improve market access to the goods of developing countries, and particularly LDCs.

Supporting developing countries' governance and policy capacities

7.The OECD will continue to work with developing countries and countries in transition to help them identify and meet key human and governance capacity needs, including through use of information and communication technologies. OECD Global Forums and regional dialogue can support developing countries' efforts to build good governance and market-supportive institutions conducive to mobilising domestic resources and attracting investment capital. Such resources are critically important to developing countries' efforts to achieve sustained economic growth and support their capacities to address vital environmental, educational, health and other needs. We welcome initiatives at the regional level, such as the New Partnership for Africa's Development (NEPAD), and stand ready to share the OECD's experience and expertise, notably on peer reviews, in support of a sustained commitment to strengthen political and economic governance.

Improving aid effectiveness and ensuring adequate aid volume

8.Aid remains an important policy instrument and complement to domestic and international private capital for reducing poverty, preventing conflict, promoting good governance and creating an enabling environment conducive to achieving private sector-led growth. The OECD, where the world's major donors meet, has a key role in improving aid effectiveness, thereby sustaining the case for aid volume. Peer review in the DAC is an important tool in support of this role. The OECD is working to reduce the complexity of aid management procedures in collaboration with multilateral aid agencies and developing countries, and to ensure effective implementation of all aspects of the OECD/DAC Recommendation on untying aid to the least developed countries.

Strengthening partnerships and accountability

9.The OECD will strengthen its partnerships with non-members, in particular developing countries, as well as with international organisations and other stakeholders through analytical work, policy dialogue, and advice. A broader and more effective dialogue will improve the quality of our efforts to support development. The OECD will account for its actions to advance this shared development agenda through regular review and reports on progress.